LUXEMBOURG Law and Practice Contributed by: Vassiliyan Zanev and Natalja Taillefer, Loyens & Loeff Luxembourg S.à r.l.
Additionally, the Luxembourg Law of 8 Decem - ber 2021 implementing the EU’s Covered Bonds Directive (EU) 2019/2162 (the “Covered Bonds Law”) regulates the issue of covered bonds ( lettres de gage ). Although the existing frame - work under the 1993 Law already provides for a special covered bonds regime for Luxembourg mortgage banks ( banques d’emission de lettres de gage ), the Covered Bonds Law also allows the issuance of covered bonds by the standard banks without requiring a specialised licence for this purpose. Luxembourg banks (including mortgage banks) are supervised by the CSSF and are subject to certain activity restrictions and other require - ments under the 1993 Law and the Covered Bonds Law, including a mandatory over-collat - eralisation ratio. 4.10 SPEs or Other Entities Securitisation Criteria In order to benefit from the regime under the Securitisation Law, it is necessary that: • the Luxembourg securitisation undertaking (also referred to here as an SPE) submits itself to the provisions of the Securitisation Law in its articles of incorporation, management regulations or issue documents; and • the transaction satisfies the substantive crite - ria of the securitisation set out in the Securiti - sation Law. Regarding the second condition, the Securitisa - tion Law defines a securitisation as a transaction by which a securitisation undertaking (i) acquires or assumes, directly or indirectly through anoth - er undertaking, risks relating to claims, other assets, or obligations assumed by third parties or inherent to all or part of the activities of third parties, and (ii) issues financial instruments or
contracts for the whole or part of any kind of loan, the value or yield of which depends on such risks. Despite this very broad definition, the CSSF clarifies in its guidelines on securitisation dated 23 October 2013 (the “Securitisation FAQ”) that the main purpose of a securitisation transac - tion under the Securitisation Law must be an economic “transformation” of certain risks into securities and that the parties should comply with the legal definition of securitisation and the spirit of the law. Legal Form In Luxembourg, a securitisation undertaking governed by the Securitisation Law can be set up as a company or fund. A securitisation company is subject to the gen - eral corporate framework under the Companies Law and can take the form of: • a public limited company ( société anonyme , or SA); • a private limited company ( société à respon - sabilité limité e, or Sàrl); • a partnership limited by shares ( société en commandite par actions , or SCA); • a co-operative organised as a public limited company ( société cooperative organisée sous forme de société anonyme ); • a general corporate partnership/unlimited company ( société en nom collectif ); • a common limited partnership ( société en commandite simple or SCS); • a special limited partnership ( société en com - mandite spéciale or SCSp); or • a simplified company limited by shares ( société par action simplifiée ).
235 CHAMBERS.COM
Powered by FlippingBook